The Asian financial crisis, multilateral relations and the East Asia Summit ( )

Transcription

1 4 The Asian financial crisis, multilateral relations and the East Asia Summit ( ) The Australian elections on 2 March 1996 ushered in a period in which the new John Howard Government emphasised promoting bilateral relationships and appeared for some time to reduce emphasis on multilateral cooperation, including with the Association of Southeast Asian Nations (ASEAN). The diplomatic climate was also influenced greatly by the Asian financial crisis and by the traumatic transition of East Timor from Indonesian rule to independence. By the end of the 1990s, Australia s multilateral relations with ASEAN appeared to have cooled substantially. The latter period of the Howard Government, however, brought a renewal of cooperation with ASEAN after This chapter discusses these issues by looking in turn at the Howard Government s approach to Asia, the challenges posed to Southeast Asia and ASEAN by the Asian financial crisis, East Timor s transition to independence, the hiatus in Australia ASEAN relations in the late 1990s, and developments after 2001 that included two major advances: a trade agreement between ASEAN and Australia and New Zealand, and ASEAN s invitation to Australia to accede to the Treaty of Amity and Cooperation (TAC) and to join the new East Asia Summit. 107

2 Engaging the Neighbours The Howard Government and Asia The Howard Government came to office committed to what it saw as a pragmatic pursuit of the national interest. 1 In a speech in August 2001, Howard characterised his approach as one of positive realism that involved a realistic appreciation of the differences between... societies and cultures, but positively focused on... shared interests and on a mutual respect. 2 Howard emphasised that nations should respect each other s differences: he said in April 2003 that good neighbours recognise each other s values and beliefs. 3 The Howard Government reaffirmed a strong commitment to Australia s relationship with the US. The relationship deepened further after the terrorist attacks in the US on 11 September In the immediate aftermath of these attacks, Howard (who was visiting the US at the time) offered Australia s full support to the US and on 14 September 2001 the Australian Government formally invoked the ANZUS (Australia, New Zealand, United States) Treaty for the first time. Australia went on to support and contribute to the US-led military involvements in Afghanistan and in Iraq. 4 In relations with Asia, the government placed special emphasis on China and Japan. After initial tensions in 1996 over China s confrontation of Taiwan, Australia s China relationship expanded greatly, including through enhanced economic interactions and new areas of regular dialogue. 5 The Howard Government pursued a closer relationship with Japan and inaugurated a new trilateral dialogue with the US and Japan. 6 1 Stewart Firth, Australia in International Politics: An Introduction to Australian Foreign Policy, 3rd edn, Crows Nest, NSW: Allen & Unwin, 2011, p Quoted in Allan Gyngell and Michael Wesley, Making Australian Foreign Policy, 2nd edn, Cambridge: Cambridge University Press, 2007, p Quoted in ibid., p Paul Kelly, Howard s Decade: An Australian Foreign Policy Reappraisal, Lowy Institute Paper 15, Sydney: Lowy Institute for International Policy, 2006, pp Gyngell and Wesley, Making Australian Foreign Policy, p Rowan Callick, Beijing Attacks Curbs on N Korea, The Australian, 21 September

3 4. The Asian financial crisis, multilateral relations and the East Asia Summit The Howard Government came to office with a commitment to engagement with Southeast Asia and to ASEAN that was asserted by the Minister for Foreign Affairs, Alexander Downer, in some of his early statements in office. On 11 April 1996, Downer said that [t]here is a national consensus on the importance of Australia s engagement with Asia and there is a strong recognition that no side of Australian politics owns the Asia vision. Downer declared that the government would base its Asian engagement on three approaches: regional economic dialogue through the Asia-Pacific Economic Cooperation (APEC) grouping, regional security cooperation within the ASEAN Regional Forum (ARF), and strengthening the focus on bilateral relations. On the future of the regional architecture, Downer said that APEC and ASEAN were central to building the trust and sense of shared interests that were the basis of the region s security and economic future. 7 In May 1996, Downer re-emphasised the government s commitment to the ARF, which he said should continue to develop regional dialogue on issues such as defence planning and acquisition. 8 While endorsing the role of regional institutions, the government emphasised the primacy of bilateral relationships. There was also commensurately less emphasis on big picture concepts of multilateral and regional cooperation. The overall approach was affirmed in the government s foreign policy White Paper released in 1997: Preparing for the future is not a matter of grand constructs. It is about the hard headed pursuit of the interests which lie at the core of foreign and trade policy: the security of the nation and the jobs and standard of living of the Australian people. In all that it does in the field of foreign and trade policy, the Government will apply the basic test of national interest. 9 7 Don Greenlees, Downer Assigns Asia Top Priority, The Australian, 12 April Michael Dwyer, Downer Calls for ARF to Arbitrate Regional Disputes, Australian Financial Review, 3 May Australian Department of Foreign Affairs and Trade, In the National Interest: Australia s Foreign and Trade Policy White Paper, Canberra: Commonwealth of Australia, 1997, p. iii. 109

4 Engaging the Neighbours ASEAN, the Asian financial crisis and East Timor s independence: From mid-1997, ASEAN encountered several issues that challenged it as an institution and that had significant implications for Australia. ASEAN under challenge: Enlargement issues and the Asian financial crisis ASEAN from the mid-1990s had been pursuing a policy of incorporating, as members, the other states considered widely to be part of Southeast Asia : Cambodia, Laos, Myanmar (Burma) and Vietnam. Vietnam entered the Association in 1995 and Laos and Myanmar followed in While the government (like the preceding Labor administration) had reservations about internal conditions in Myanmar, Australia supported its membership in ASEAN. In overall terms, Downer considered that there was a strong case for Myanmar s entry: it was driven by Dr Mahathir Mohamad and President Suharto who both thought that it made more sense to get Burma into ASEAN than leave it in the Chinese orbit I thought that was a pretty damn good argument. 10 It had been envisaged that Cambodia would also join in However, on 5 6 July 1997, this timetable was derailed by the outbreak of conflict between the two parties in the Coalition Government (the National United Front for an Independent, Neutral, Peaceful and Cooperative Cambodia (FUNCINPEC) led by Prince Norodom Ranariddh and the Cambodian People s Party led by Hun Sen). After a period of extensive tensions between the parties, the Cambodian People s Party forces led a coup on 5 July 1997 against its partner in the coalition administration, FUNCINPEC, which resulted in over 40 deaths and hundreds of arrests: Ranariddh and a number of senior figures in his party had left the country a few days earlier. Subsequently there were some executions, particularly by the Cambodian People s Party forces of FUNCINPEC members. These events left Hun Sen as the dominant leader in Cambodia. 11 Australia condemned the violence and expressed concern 10 Alexander Downer, interview with the author, Adelaide, 15 April MacAlister Brown and Joseph J. Zasloff, Cambodia Confounds the Peacemakers, , Ithaca, NY: Cornell University Press, 1998, pp

5 4. The Asian financial crisis, multilateral relations and the East Asia Summit at the overthrow of Ranariddh by military means. The government pursued its approach in association with ASEAN, which Downer saw as the first and most important point of influence in relation to Hun Sen. 12 In response to these events, the ASEAN foreign ministers decided on 10 July to delay Cambodia s entry. 13 The developments in Cambodia were a setback for ASEAN s desired image of a group able to sponsor peaceful cooperation, but the enlargement process continued: Cambodia ultimately was admitted to ASEAN in A further set of issues confronted ASEAN members, and other states in East Asia, from mid In early July 1997, speculative pressure forced a devaluation of the Thai currency and began to inflict major pressure on the Thai economy. By early September, the Malaysian ringgit had fallen to its lowest level of value vis-à-vis the US dollar since 1971, and in a period of six months the Thai stock market had lost 38 per cent of its value, while Malaysia s lost 44 per cent, the Philippines lost 35 per cent, Indonesia s lost 17 per cent and Japan s lost 4 per cent. By the end of the year, severe damage had been sustained by both the Indonesian and South Korean economies; in 1998, Indonesia s economy declined by about 14 per cent of gross domestic product. A number of ASEAN members experienced a rise in unemployment, which increased pressures on incumbent governments. 14 The crisis had a substantial political impact in the ASEAN region. Thailand and the Philippines saw governments replaced through elections. The political impact was greatest in Indonesia, where ASEAN s senior statesman President Suharto was forced to resign in May 1998, amid substantial social unrest and political protest. The departure of Suharto was followed by profound changes in Indonesia s political processes, which included the advent of democratic elections and a sharp change in policy towards East Timor in Moreen Dee and Frank Frost, Indochina, in Peter Edwards and David Goldsworthy, eds, Facing North: A Century of Australian Engagement with Asia, Volume 2: 1970s to 2000, Carlton, Vic.: Melbourne University Press, 2003, p Mark Baker, Hun Sen Defies His Critics, The Age, 11 July Michael Wesley, Australia and the Asian Economic Crisis, in James Cotton and John Ravenhill, eds, The National Interest in a Global Era: Australia in World Affairs , South Melbourne: Oxford University Press, 2001, pp See also Andrew MacIntyre, T. J. Pempel and John Ravenhill, eds, Crisis as Catalyst: Asia s Dynamic Political Economy, Ithaca, NY: Cornell University Press,

6 Engaging the Neighbours The financial crisis abruptly interrupted the development of the ASEAN economies and had an adverse impact on the image of economic progress and stable development in ASEAN members and in East Asia more widely. Investor confidence declined and funds were withdrawn from many economies. 15 ASEAN s image in this period was also affected adversely by the emergence of major environmental problems arising from annual patterns of burning of large areas of forest and agricultural lands particularly in Indonesia, which produced a haze that caused major health and pollution problems for neighbouring states including Malaysia and Singapore. ASEAN discussed the issue but was not able to pursue cooperation that could alleviate the problem. 16 ASEAN s challenges in this period prompted some internal debate on whether the Association needed to revise its approach to cooperation and modify the doctrine of non-interference in internal affairs to acknowledge the fact that developments within member states could affect the interests of others, as the haze had illustrated. Despite advocacy by Thailand and the Philippines, ASEAN did not adopt a major change in approach, but the debate highlighted the climate of uncertainty in ASEAN that had been triggered by the financial crisis. 17 Australia, ASEAN and the financial crisis The impact of the Asian financial crisis was all the more sharp because the setbacks were largely unexpected. In Australia, the Howard Government s foreign policy White Paper (which had been prepared before the onset of the economic crisis and was released in August 1997) had assumed continuing growth in East Asia. The paper said that the Government s judgement is that economic growth in industrialising East Asia will continue at relatively high levels over the next fifteen years, and that the countries of East Asia will become even more important to Australia as trade and investment partners, 15 Wesley, Australia and the Asian Economic Crisis, pp Simon S. C. Tay, Blowing Smoke: Regional Cooperation, Indonesian Democracy, and the Haze, in Donald K. Emmerson, ed., Hard Choices: Security, Democracy, and Regionalism in Southeast Asia, Stanford, CA: Walter H. Shorenstein Asia-Pacific Research Center Books, Christopher B. Roberts, ASEAN Regionalism: Cooperation, Values and Institutionalization, Abingdon: Routledge, 2012, pp

7 4. The Asian financial crisis, multilateral relations and the East Asia Summit and in security terms. 18 This was a reasonable long-term projection, but in the short term many regional economies had major problems and the situation was of substantial concern to Australia. Australia gave significant support to efforts to alleviate the crisis. By February 1998, Downer noted that Australia was contributing over A$4 billion to the packages of assistance being provided by the International Monetary Fund (IMF) to Indonesia, Thailand and South Korea. He observed that apart from Japan, Australia was the only country to be involved in all three packages. Downer had commented earlier (in November 1997) on the positive impact of Australia s assistance when he said that by proving we are a partner and a neighbour for the long haul, Australia s image had changed decisively from something close to regional mendicant to a regional mate. 19 Another element in Australia s response was support to Indonesia by making representations to the Bill Clinton administration to encourage the US to support more sympathetic and favourable treatment for Indonesia from the IMF, whose terms of assistance were seen as harsh and demanding. 20 The Asian financial crisis had a significant influence on the Howard Government s approach to relations with Asia and its appraisal of Australia s role. Australia s economic performance during the period of the crisis brought a sense of increased assurance. Australia s economy continued to grow despite the adverse developments in East Asia. This was striking validation of Australia s extensive economic reform since the 1980s and the value in Australia s wide-ranging international economic linkages. 21 These perceptions were reflected in statements by the Howard Government that expressed confidence that Australia after the financial crisis was more accepted and influential. Downer said in July 1999 that our advice has carried particular weight for two reasons: because it comes from a country that has prospered when others have been 18 Australian Department of Foreign Affairs and Trade, In the National Interest: Australia s Foreign and Trade Policy White Paper, Canberra: Commonwealth of Australia, 1997, p. v. 19 Roderic Pitty, Regional Economic Co-operation, in Peter Edwards and David Goldsworthy, eds, Facing North: A Century of Australian Engagement with Asia, Volume 2: 1970s to 2000, Carlton, Vic.: Melbourne University Press, 2003, p Paul Kelly, The March of Patriots: The Struggle for Modern Australia, Carlton, Vic.: Melbourne University Press, 2009, pp Ibid. 113

8 Engaging the Neighbours doing it tough, and because we have shown that we are prepared to take our own advice. It has been a case of do as we say, and do as we do. Prime Minister Howard noted in September 1998 that Australia is more respected in Asia now than it was five years ago because we ve done well and we ve been able to help Australia is relatively speaking stronger now and has got more influence than it had before. Downer argued that Australia s image had changed in the wake of the crisis. He argued in July 1998 that [w]e have ceased being the region s demandeur, badgering our neighbours for attention and recognition. Australia is now a genuinely close partner and regional friend, a country that can be relied on in good times and bad. 22 These responses were understandable in relation to Australia s comparative economic performance and substantial assistance to neighbouring states. However some analysts saw complexity in Australia s response to the financial crisis as conveyed in the messages presented to the domestic audience and to Southeast and East Asia. The assertions of confidence in Australia s own capacities and success could have negative aspects. Anthony Milner commented that: Ministers were catering to the needs of what Howard called the Australian psyche when they began to speak of Australia as the strong man of Asia In doing so, however, they helped to promote the type of swagger that the government s own White Paper had warned against: the White Paper had insisted that Australians must be prepared to face the fact that their country would become less not more powerful in regional terms over the coming years. It was a swagger that was also likely to be remembered for many years in the region itself. 23 The policies pursued by the Australian Government in response to the Asian financial crisis had involved bilateral assistance rather than cooperation with ASEAN as a collectivity. But by providing assistance to key member countries, Australia had underscored the importance of relationships with Southeast Asia. The financial crisis, however, also had some significant influences on patterns of regional cooperation with potential implications for Australia. 22 Quoted in Wesley, Australia and the Asian Economic Crisis, p Anthony Milner, Balancing Asia Against Australian Values, in James Cotton and John Ravenhill, eds, The National Interest in a Global Era: Australia in World Affairs , South Melbourne: Oxford University Press, 2001, p

9 4. The Asian financial crisis, multilateral relations and the East Asia Summit As noted in Chapter 3, debate had been developing about the desirability of cooperation that could be pursued by East Asian states themselves without the participation of countries not considered to be Asian. These views were reflected in Malaysia s proposal in December 1990 for an East Asian Economic Group, a concept that had been pursued as a caucus under the aegis of APEC. The impact of the financial crisis led to renewed interest in East Asian-focused cooperation that could help forestall any future crisis and add greater weight for Asia in dealing with international financial institutions such as the IMF. These views helped create support for a meeting of the ASEAN members along with Japan, China and South Korea in Kuala Lumpur in December 1997 that led to the inauguration of the ASEAN Plus Three forum. 24 Australia had been able to participate as a founding member in the security grouping that ASEAN had sponsored, the ARF, but Australia was not a member of this new group. The advent of ASEAN Plus Three clearly challenged Australia s view of its Asian role and how best to approach emerging patterns of cooperation involving ASEAN and Northeast Asia. The Howard Government ultimately adopted a cautiously positive approach to the new group. 25 The government s second foreign policy White Paper, released in 2003, stated: While the process still has a long way to go before its full significance can be determined, it is reasonable to assume that there will be a benefit to the region and to partners such as Australia in a process which fosters dialogue and co-operation among the countries of East Asia and thereby contributes to stability and harmony Australia would be pleased to be involved in the ASEAN+3 process. We have registered our interest in joining the grouping if invited at some later stage Richard Stubbs, ASEAN Plus Three: Emerging East Asian Regionalism? Asian Survey, 42(3) 2002: The issue of how Australia should approach ASEAN Plus Three was discussed by Downer and the members of his foreign affairs council of academic and private sector advisors. Milner considers that the council s views were an important influence on the government s thinking on the issue; Anthony Milner, personal communication, 30 November Australian Department of Foreign Affairs and Trade, Advancing the National Interest: Australia s Foreign and Trade Policy White Paper, Canberra: Commonwealth of Australia, 2003, pp

10 Engaging the Neighbours Although Australia did not gain entry to the ASEAN Plus Three grouping, it was later able to participate in a dialogue that grew out of this grouping, the East Asia Summit (see below). East Timor s independence A further significant issue for Australia and Southeast Asia in this period was the process of conflict and change that led to independence for the territory of East Timor. 27 This process can be seen partly as another major outcome of the Asian financial crisis, which had led to the resignation of President Suharto and the potential for new policy avenues for Indonesia and for East Timor. The status of East Timor had been a focus of strain and tension in Australia Indonesia relations since Australia after 1979 under successive governments had maintained de jure recognition of Indonesia s incorporation of the territory. When the Howard Government came to office there was no sign that Australian policymakers expected any change to the territory s status: Downer commented in April 1996 in relation to the condition of human rights in East Timor, that the issue was a pebble in the shoe of the Australia Indonesia relationship and that little would be achieved by making an enormous amount of noise. 28 In the years after 1975, however, it was clear that Indonesia s incorporation of East Timor had not been accepted by the great majority of the East Timorese people and ongoing conflict in the territory, which had involved the loss of as many as 200,000 lives, had been highlighted again by the Santa Cruz massacre in November 1991 (in which between 200 and 500 people were shot or disappeared). 29 The end of the Suharto regime opened the way for revision of attitudes towards the territory in Australia and the Howard Government altered Australian policies. Howard sent a letter in December 1998 to President B. J. Habibie (Suharto s successor), proposing that Indonesia review its position and consider a transition to autonomy for the territory. When President Habibie announced in January 1999 a change of 27 For a comprehensive analysis, see James Cotton, East Timor, Australia and Regional Order: Intervention and its Aftermath in Southeast Asia, London: Routledge, Greenlees, Downer Assigns Asia Top Priority. 29 Cotton, East Timor, p

11 4. The Asian financial crisis, multilateral relations and the East Asia Summit policy that would review the status of the territory, a process was initiated that led to a ballot on 30 August 1999 on a proposal for a revised status of special autonomy for East Timor within Indonesia. 30 The voters decided by a majority of 78.5 per cent to reject the proposed special autonomy and to separate from Indonesia. 31 The lead-up to the ballot was accompanied by substantial violence, particularly by pro- Indonesian militias, and further serious violence occurred after the ballot. In this circumstance, Australia took a leading role in seeking to facilitate an intervention authorised by the United Nations (UN) and accepted by the government of Indonesia. 32 In the years after 1975, ASEAN members had not criticised Indonesia s policies in East Timor because of ongoing sensitivities in the region in relation to the principle of non-interference in internal affairs and the members reluctance to criticise Indonesia, given its central role in ASEAN. 33 In the period up to the 30 August ballot, neither ASEAN nor the ARF which operated on the basis of consensus in discussion and decision-making played any major role in deliberating on or attempting to influence the process of change in East Timor. 34 In relation to regional groupings, it was a summit of APEC (in Auckland in September 1999) where a number of bilateral discussions were held on the sidelines of the summit meetings, with Australia playing a leading role, which helped develop a multilateral response to the crisis. James Cotton has observed that [w]hen confronted by the post ballot bloodshed and the Indonesian Government s clear inability, or disinclination, to discharge its obligations to the United Nations and to the East Timorese to maintain order, ASEAN as an organisation could find no mechanism through which to influence developments Ibid., pp The ballot presented two options to voters: Do you accept the proposed special autonomy within the unitary state of the Republic of Indonesia? and Do you reject the proposed special autonomy for East Timor, leading to East Timor s separation from Indonesia? See Question of East Timor: Report of the Secretary-General, New York, United Nations, 5 May 1999, in Australian Department of Foreign Affairs and Trade, East Timor in Transition : An Australian Policy Challenge, Canberra: Australian Department of Foreign Affairs and Trade, 2001, p Cotton, East Timor. 33 Alan Dupont, ASEAN s Response to the East Timor Crisis, Australian Journal of International Affairs, 54(2) Amitav Acharya, Constructing a Security Community in Southeast Asia: ASEAN and the Problem of Regional Order, 3rd edn, Abingdon: Routledge, 2014, pp Cotton, East Timor, pp

12 Engaging the Neighbours Subsequently, four ASEAN members (Thailand, the Philippines, Malaysia and Singapore) took part on an individual basis in INTERFET (International Force for East Timor), which entered East Timor to promote stabilisation, with Thailand providing the deputy commander for the force. The participation of the four ASEAN members was important to the success of INTERFET; of the total force of 9,900 deployed in late September 1999, about 2,500 were from the four ASEAN members, with Australia providing 5,500 personnel. Alan Dupont has observed that [w]ithout ASEAN participation Australia would have been dangerously isolated regionally and even more stretched militarily on the ground in East Timor. 36 Australia played a very substantial role in INTERFET and provided the commander, Major-General Peter Cosgrove, who became the second Australian military leader in a decade to lead a multinational force to promote security and stabilisation in a UN-authorised operation in Southeast Asia. The Australian-led intervention succeeded in stabilising conditions and helped initiate a process of UN-sponsored assistance that led to East Timor gaining formal independence in May In the period leading up to the intervention and in the aftermath, Australia s relations with Indonesia experienced severe strain. Indonesia abrogated the Australia Indonesia Agreement on Maintaining Security that had been negotiated by Paul Keating s government in December In the longer term, however, the process of independence for East Timor gradually removed an issue that had been a major obstacle and cause of tension in the Australia Indonesia relationship since the 1970s and this assisted in improving the climate for Australia s ASEAN relations. Hiatus in ASEAN relations At the end of the 1990s there were indications of a sense of hiatus in Australia s engagement with ASEAN. Australia had played a substantial role in contributing to efforts to alleviate the effects of the Asian financial crisis but Australia s multilateral relationships with Southeast Asia experienced some setbacks. Several factors contributed to this. Australia s image had been compromised by the 36 Dupont, ASEAN s Response, p Jamie Mackie, Australia and Indonesia: Current Problems, Future Prospects, Lowy Institute Paper 19, Sydney: Lowy Institute for International Policy, 2007, pp

13 4. The Asian financial crisis, multilateral relations and the East Asia Summit controversy in Australia over the policies and approaches of Pauline Hanson, a controversial parliamentary candidate who had lost Liberal Party endorsement but had won a seat in Federal Parliament as an independent in the March 1996 elections: she went on to form the One Nation Party. In her inaugural speech in Federal Parliament in September 1996, Hanson had expressed concern at the level of Asian immigration to Australia and her popularity after 1996 was seen as harking back to earlier phases of Australian reservations about engagement with Asia. Although her party held only one seat in the national parliament, extensive media coverage in Australia and Asia gave the impression she represented a major new political force. Prime Minister Howard was perceived as having been slow to react to the rise of Hanson and his response drew some criticism both in Australia and in Southeast Asia. 38 Further controversy was aroused by comments associated with Howard during the early phase of Australia s involvement in East Timor after the 30 August 1999 ballot. In an article in September 1999 in The Bulletin magazine in which he was interviewed by the journalist Fred Brenchley, Howard commented in positive terms about his government s approach to Asian relations. 39 He argued that the former Labor Government s approach towards Asia made Australia look as though we were knocking on their door saying please let us in : instead we were always somebody they would want to have in because of our particular strengths. In the East Timor intervention, Howard suggested, Australia was playing an influential, constructive and decisive role in the affairs of the region. In the same article, however, Brenchley introduced the term deputy to refer to Australia s position vis-à-vis the United States in its approach to regional involvements. 40 Although Howard himself had not used the word deputy and soon after disavowed it, the notion of Australia as a deputy sheriff to the US gained considerable currency in Southeast Asia and attracted critical comments. 41 Thailand s Deputy Foreign Minister Sukhumbhand Paribatra compared Howard s reported comments unfavourably 38 Kelly, The March of Patriots, pp Fred Brenchley, The Howard Defence Doctrine, The Bulletin, 28 September Ibid. 41 More than a decade later, a study found that the term deputy sheriff was widely cited by analysts and officials in ASEAN members in relation to Australia US relations; see Anthony Milner and Sally Percival Wood, eds, Our Place in the Asian Century: Southeast Asia as The Third Way, Melbourne: Asialink, University of Melbourne, 2012, p

14 Engaging the Neighbours with President Theodore Roosevelt s recommendation to talk softly and carry a big stick. Dr Mahathir labelled Howard s comment as unmitigated arrogance. When Australians claim to be Asian, they see only themselves lording it over [Asia]. Malaysia s Foreign Minister Syed Hamid denied that Australia had a leadership role: We feel that regional affairs should be handled by the countries of the region. We do not need a supervisor or police inspector or anything of the sort to oversee our activities. 42 Comments and reactions by the government also seemed to reflect reservations about the potential for regional institutions and for Australian involvement in them. In a speech in Beijing in April 2000, Downer appeared to place limits on the potential for Australia s regional institutional ties. He suggested that Australia could not expect to take part in the cultural and emotional dimensions of East Asian regionalism and that its role would appropriately be in functional realms: If we describe regionalism on the basis of what you might broadly describe as an emotional community of interests, then Australia doesn t have those types of emotional association with the region, and ethnic and cultural associations very obviously For us, regionalism is always going to be practical regionalism looking at ways that we can work with our region to secure our own economic and security objectives. 43 In July 2001, Downer expressed some frustration at the Asian (and ASEAN) way of diplomacy in a speech in Singapore when he said, ASEAN has a culture of working around problems rather than confronting them. The limits of this approach have been exposed by the financial crisis, and by the way in which expansion has increased ASEAN s political and economic diversity. 44 These comments were perceived at the time as indicating that the government was stepping back from the challenges of institutional engagement in Asia. 45 Milner observed about this period in Australian 42 Quoted in Wesley, Australia and the Asian Economic Crisis, p Paul Kelly, One Club We Won t Be Joining, The Australian, 26 April Alexander Downer, What Australia Wishes for ASEAN, Speech to the Singapore Institute for International Affairs, Singapore, 23 July Greg Sheridan, Inept Downer a Regional Flop, The Australian, 28 April

15 4. The Asian financial crisis, multilateral relations and the East Asia Summit foreign relations that many of those Australians who had been deeply committed to developing Asian engagement, including members of the Coalition Government, were anxious: They worried about the impact on the region of Australian talk about being the strong man of Asia, and of the widely publicised suggestion that its special security role was that of a US Deputy. They were concerned also that Australians, in gaining a new confidence in their country and its values, were conveying an element of complacency and even belligerence in handling regional sensitivities. 46 Against this background, it was notable that Australia s long-standing efforts to increase dialogue and cooperation with ASEAN met some setbacks after 2000, on economic and political levels. From 1993 Australia had sought an association between the Australia New Zealand Closer Economic Relations (CER) and the ASEAN Free Trade Agreement (AFTA). In October 1999, ASEAN and Australian and New Zealand ministers decided to establish a task force to explore a free trade linkage. ASEAN was willing to consider the proposal although it was known that Malaysia, Indonesia and the Philippines were not as keen on the concept as were Singapore, Thailand and Brunei, and that the Indochina countries were at best non-committal. 47 At a meeting of ASEAN and the Australian and New Zealand ministers in Chiang Mai in Thailand in early October 2000, the task force recommended the establishment of a free trade area between AFTA and CER as desirable and feasible. However, the Chiang Mai meeting decided against pursuing any direct linkage between the two trade arrangements. Instead, the ministers decided to deflect the proposal by asking senior officials to study the scope for a closer economic partnership to pursue trade facilitation and capacity-building. At a time when economic recovery was still not assured, some ASEAN members were reluctant to support further trade barrier cuts. However, it was significant that the countries opposing the linkage included not only Malaysia but also Indonesia, which in the early 1990s had been a key partner with Australia in pursuing regional trade liberalisation through APEC Milner, Balancing Asia, p Pitty, Regional Economic Co-operation, pp Ibid. 121

16 Engaging the Neighbours The rebuff for Australia highlighted the close inter-relationship between political and economic issues in ASEAN s cooperation and external relations. The importance of political factors in any such negotiations was stated clearly by Malaysia s Trade Minister Rafidah Aziz in a notable comment during the Chiang Mai meetings. Rafidah said that the free trade proposal had to be looked at in its totality It has to be a political decision and then we have to have the right environment. It s not simply an economic thing, its political. 49 Australia had a further setback in 2002 when it sought to gain dialogue status for Australia s head of government at ASEAN s leadership summit meetings (now held annually). At the summit in Phnom Penh in November 2002, Australia s bid was supported by Brunei, Singapore and Cambodia, was opposed by Malaysia, and received only lukewarm support from Indonesia and Thailand. 50 At the 2003 Bali meetings it was reported that Australia did not renew its efforts to gain representation and that the issue of Australian representation had been dropped from the agenda for discussion and had been shelved indefinitely. 51 It thus seemed at this point as if Australia had little prospect of extending its interactions with ASEAN at the leadership level. Renewal of progress: While Australia s multilateral ASEAN relations had appeared to be at a low point at the beginning of the decade, several factors in the international and regional environment emerged after 2001 and contributed to a new and more positive context for the relationship. The key developments were the global and regional impact of the terrorist attacks in the US on 11 September 2001 and in Bali on 12 October 2002, regional responses to China s increasing role and profile, and leadership changes in two key members of ASEAN, Malaysia and Indonesia, which had significant implications for both bilateral relations and Australia s relations with ASEAN overall. 49 Tim Dodd, ASEAN Stifles New Merger Deal, Weekend Australian Financial Review, 7 8 October Mark Baker, Beyond the Pale, Sydney Morning Herald, 9 November Mark Baker, Australia Drops Bid to Join Summit, The Age, 7 October

17 4. The Asian financial crisis, multilateral relations and the East Asia Summit The political context was clearly affected by the terrorist attacks in the US on 11 September 2001 (including the destruction of the World Trade Center in New York and the attack on the Pentagon in Washington) and the increased international and regional concerns about terrorism that followed. From late 2001, attention focused intensely on the threats perceived to be posed to the countries in the ASEAN region by terrorist movements of which Jemaah Islamiyah was the most prominent. Attention was heightened after the bombings in Bali in October 2002 (in which 88 Australians were among the 202 persons killed), at the Marriott Hotel in Jakarta in August 2003 and outside the Australian Embassy in Jakarta in September Australia after 2001 expanded cooperation on counter-terrorism, signing bilateral agreements with a number of ASEAN members and a multilateral declaration with ASEAN itself. The Australian Federal Police (AFP) developed close contacts with their regional counterparts. One reflection of this was an invitation to AFP Commissioner Mick Keelty to attend a meeting of ASEAN police chiefs as an observer in August While security cooperation developed extensively, the issue of terrorism in Southeast Asia caused some tensions between Australia and ASEAN members. There was concern in Indonesia and Malaysia at raids by Australian security authorities within Australia against suspected supporters of Jemaah Islamiyah: Malaysia s Prime Minister Mahathir accused Australia in November 2002 of being unsafe for Muslims. 54 In December 2002, controversy arose when Howard was asked by a journalist whether he would consider launching pre emptive strikes against terrorist bases overseas. Howard responded that [i]t stands to reason that if you believe somebody was going to launch an attack on your country, either of a conventional kind or of a terrorist kind, and you had the capacity to stop it, and there was no alternative other than to use that capacity, then of course you would have to use it Michael Wesley, Rebuilding Engagement: Australia and South-East Asia, in James Cotton and John Ravenhill, eds, Trading on Alliance Security: Australia in World Affairs , South Melbourne: Oxford University Press, 2007, pp Building Trust with ASEAN, Daily Telegraph, 14 August Greg Sheridan, ASEAN Thumbs Down Caps Our Bad Week in Asia, The Australian, 7 November Steve Lewis, Howard Runs the Gauntlet of Asia, The Australian, 2 December

18 Engaging the Neighbours Howard s comments on pre-emptive strikes had been made in the context of discussion in the US about pre-emption as a tool in foreign and security policy (including in the George W. Bush administration s National Security Strategy in September 2002) and at a time when there was widespread debate in the US about a possible strike against the Saddam Hussein regime in Iraq. They aroused regional sensitivities about interference in internal affairs and were criticised in several ASEAN member countries. Mahathir said that any pre-emptive strikes against Malaysian targets would be considered an act of war. Malaysia and the Philippines threatened to suspend bilateral counterterrorism cooperation with Australia and there were also critical editorials in the media in Singapore, Thailand, Indonesia, Malaysia and the Philippines. 56 Despite these arguments, Australia pursued extensive cooperation with ASEAN members on counter-terrorism after Most of the cooperation on terrorism in Southeast Asia was bilateral. However, this increased contact extended the sense of mutual interest between Australia and many ASEAN members, as ASEAN s Secretary-General Ong Keng Yong emphasised in comments during a visit to Australia in April Ong noted that: We have to talk about what are the substantial issues for us, and there are many shared challenges. One example is terrorism. Australia is a peaceful and stable country. It has a great influence in counterterrorism initiatives and, in this area at least, we are working together and through that we can socialise more and be more comfortable together. 57 A second key development in this period was ASEAN s perceptions of the rising economic and strategic presence of China in Southeast Asia. China had been involved increasingly in ASEAN-sponsored regional cooperation since the mid-1990s, particularly in the ARF. Its economy continued to perform strongly through the period of the Asian financial crisis. In the wake of the crisis, China was participating in the ASEAN Plus Three process and it expanded interactions with ASEAN by the development of a China ASEAN 56 Wesley, Rebuilding Engagement, pp Tony Parkinson, ASEAN Ready to Strengthen Australian Ties, The Age, 14 April

19 4. The Asian financial crisis, multilateral relations and the East Asia Summit Free Trade Agreement. 58 While welcoming many aspects of China s involvement, ASEAN members were also keenly aware that they were competing with it for access to foreign direct investment. This perceived competition was a stimulus for ASEAN to move to deepen its own cooperation through development of an ASEAN community, agreed at the Bali meetings in 2003 (see below). 59 ASEAN members were also sensitive to China s increasing strategic weight in Southeast Asia, which had been reflected in its growing emphasis on asserting its claims in the South China Sea (see Chapter 5). 60 ASEAN members wanted to avoid an over-dependence on the Chinese market and maintain a diversity of international partnerships. ASEAN concluded an Economic Partnership Agreement with Japan in ASEAN also moved to increase interest in associations with Australia and New Zealand. As has been noted, ASEAN had reasserted interest in considering an economic linkage with Australia and New Zealand in 2002 and this was affirmed the following year. ASEAN also expressed interest in enhancing political dialogue with Australia. ASEAN s Secretary-General Ong commented that [w]e cannot just be focused on China or Japan or India. Australia is our neighbour and it s been around South-east Asia for so long and its logical for us to try to find ways to strengthen the political relationship through more formal exchange. 61 A third key development in Australia s regional relations after 2001 was leadership transitions in Malaysia and Indonesia. In Malaysia, Mahathir had been a critic of Australia s policies and had advocated a mode of regional cooperation with an explicit focus on East Asia, which would not include Australia. Malaysia had been a leading force in blocking consideration of a formal trade agreement with Australia in October Prime Minister Mahathir retired in November 2003 and his successor, Abdullah Badawi, adopted a more favourable attitude towards Australia. During a visit by Minister for 58 Ian Storey, Southeast Asia and the Rise of China: The Search for Security, London: Routledge, 2011, pp Roberts, ASEAN Regionalism, pp ; Etel Solingen, ASEAN Cooperation: The Legacy of the Economic Crisis, International Relations of the Asia-Pacific, 5(1) 2005: Michael Wesley, The Howard Paradox: Australian Diplomacy in Asia, , Sydney: ABC Books, 2007, pp Parkinson, ASEAN Ready. 62 John Funston, The Legacy of Dr Mahathir, Australian Financial Review, 30 July

20 Engaging the Neighbours Foreign Affairs Downer to Kuala Lumpur in April 2004, the two sides announced a new annual dialogue between their foreign ministries, annual consultations between senior officials on regional security issues and plans for a state visit by Prime Minister Badawi to Australia (which would be the first by a Malaysian prime minister since Dr Mahathir visited in 1984). It was made clear that Malaysia would now not block closer economic associations between Australia and ASEAN. 63 Relations with Indonesia had been tense in the aftermath of the East Timor intervention and discord continued during the period of the presidency of Megawati Sukarnoputri (July 2001 October 2004). However, new areas for dialogue and cooperation were developed, particularly after the Bali bombings in October Extensive cooperation developed in counter-terrorism activities, with AFP Commissioner Keelty and his counterpart General Da i Bachtiar playing important roles. A component of AFP personnel was based in Jakarta and worked well with their Indonesian partners; dialogue between intelligence agencies was extensive. 64 Counter-terror cooperation was a focus for increased numbers of ministerial visits; it was reported in December 2004 that there had been 42 such visits in the past two years, including nine by Downer. 65 Australia sought to extend its cooperation with Indonesia through new multilateral dialogue. Australia and Indonesia co-hosted four workshops on counter-terrorism and illegal immigration in Bali between February 2002 and February The workshops were designed to pursue broader dialogue and cooperation on issues that had been the focus of discord in Australia s regional relations. Tensions had developed over aspects of counter-terrorism policies (as noted above). 63 Mark Baker, Malaysia s New PM Leaves Mahathir s Acrimonious Legacy at the 19th Hole, The Age, 12 June Patrick Walters, Framework for Close Ties First Imperative, The Australian, 12 November Andrew Burrell, Downer Enjoys A Warmer North, Australian Financial Review, 8 December

21 4. The Asian financial crisis, multilateral relations and the East Asia Summit There had also been considerable disagreement over approaches towards illegal migration. From 1998, Australia had faced an increasing flow of asylum-seekers, who had come from countries outside Southeast Asia and transited through states in that region (particularly Malaysia and Indonesia) before travelling by boat to seek entry to Australia. Many boat journeys were organised by people-smugglers and the unauthorised arrivals were unpopular in Australia. The asylum-seeker issue was a focus of tension in key bilateral relationships, especially with Indonesia. 66 The issue was highlighted further when Australia came into dispute with Indonesia in August 2001 over the issue of the MV Tampa, which Australian authorities had prevented from entering Australian waters while carrying asylum-seekers and which the government had tried to divert to Indonesia, the country through which the asylum-seekers had transited. 67 The Bali workshops sought to recast the issues of illegal migration and terrorism as common management problems rather than the sites of rival responsibilities and prerogatives and helped defuse these issues as irritants in bilateral relations. 68 The first Bali workshop (on people smuggling, trafficking in persons and related transnational crime) involved 38 countries, including all the ASEAN members. Michael Wesley has argued that the Bali process of discussion achieved considerable success in this period in building increased cooperation in the areas addressed: Australian officials realised from their experiences in gaining regional support for APEC and the ASEAN Regional Forum over a decade earlier, that a proposal strongly supported by significant regional countries would carry more weight than a proposal made by Canberra alone. 69 It was clear that Australia Indonesia cooperation was integral to the development of the Bali process. In another multilateral collaboration, Australia and Indonesia in December 2004 co-hosted the first of what became a series of interfaith dialogues in Jakarta to build understanding between Muslims and non-muslims Kelly, The March of Patriots, pp For a detailed account of the issues in relation to the MV Tampa, see ibid., pp Wesley, Rebuilding Engagement, p. 61. See also Wesley, The Howard Paradox, pp Wesley, The Howard Paradox, p Ibid. 127